WASHINGTON – House and Senate leaders agreed last night to rewrite a newly-approved portion of the bank bill to win over the votes of three critical Senate Republicans who are wavering in their support, jeopardizing the massive bill.
Last night’s compromise, coming four days after House and Senate leaders agreed to final language for the now-2,300-page bill, would raise almost $19 billion from the Troubled Asset Relief Program and new FDIC insurance fund assessments on the biggest banks, instead of from all 8,000 federally insured banks, seeming to satisfy the three wavering Republicans, who oppose the broad-based assessment.
Senate Democrat leaders hope to hold those three votes in their effort to raise 60 votes–enough to block an expected filibuster from Senate Republicans.
Failure to raise the 60 votes could doom the bill-avidly opposed by credit unions because of the interchange amendment in it.
But last night’s compromise holds peril for credit unions because it would use the additional insurance funding to raise the reserve ratio on the FDIC’s bank fund to 1.35% (dollars reserved per $100 of insured deposits), at a time when the credit union’s National CU Share Insurance Fund’s reserve ratio is declining near 1.20%, and could prompt Congress to require a raise in NCUSIF reserves. The American Bankers Association, in fact, issued a statement immediately after last night’s action, raising that issue.
“If the Congress determines that it wants to move the FDIC target to 1.35, should it not make the equivalent change for the credit union’s NCUIF, especially since credit unions have already received a government loan to support their insurance fund?,” said Edward Yingling, head of the ABA, last night. “Does Congress intend for the FDIC fund to be better capitalized than NCUIF?”
The full House and Senate both passed the bill before but must vote again on the package, which has been changed in the combining of the separate versions passed by each chamber. Last night’s compromise is expected to delay a final Senate vote until after the Independence Day recess that starts Monday. The House is expected to pass the final version as soon as today.
Meantime, the merchants payments coalition was continuing to lobby hard for the interchange amendment that will regulate debit card fees. “I’m not declaring victory till they lower interchange fees on debit cards,” said Lyle Beckwith, chief lobbyist for the National Association of Convenience Stores, which with the rest of the merchants payments coalition is continuing to run radio and print adds both inside and outside the Beltway supporting the interchange amendment.
Senate Republicans conceded they expected to launch a filibuster and hope to hold together the entire Republican caucus to stop the Democrats from getting 60 votes. “I expect most of the Republicans will vote again against the bill,” said Don Stewart, chief spokesman for Senate Minority Leader Mitch McConnell of Kentucky. “I don’t think they’ve made it any better.”
The 60 vote super majority appeared a certainty last week but the odds changed Monday at the death of Democratic icon Robert Byrd of West Virginia. At least one other Democrat has vowed to vote against the bill, cutting the sure Democrat votes to 57, at most, meaning they need at least three Republicans to join them to overcome a filibuster.
Stewart predicted the upheaval in the Senate will cause Democrat leaders to push a final vote off on the bank bill, which was expected to occur this week, until after next week’s Independence Day recess. “They (the Democrats) don’t have the votes,” he told the Credit Union Journal yesterday.
